The near-term outlook for the housing market is not good. A recent Wall Street Journal article, entitled “Home Forecast Calls for Pain” sums it up: “Economists, builders and mortgage analysts are predicting the weakened U.S. economy will depress housing prices for years, restraining consumer spending, pushing more homeowners into foreclosure and clouding prospects for a sustained recovery.”
But the news isn’t necessarily quite so bleak in every single market across the country. In fact, the National Association of Home Builders (NAHB) recently released its first monthly Improving Markets Index (IMI), identifying 12 local housing markets that are faring pretty well.
The IMI identifies local markets that show positive trends in housing permits, employment, and home prices over a six-month period. Examining these key indicators provides a comprehensive, but conservative method to determine which are improving, according to NAHB Chief Economist David Crowe. “Last year at this time, there was not a single market that showed improvement using these criteria, and now we can point to 12 examples of growth,” he said in a recent press release.
The first IMI, released in early September, includes a few surprising names that are relative newcomers to “good news” lists. Pittsburgh, for example, a depressed city that was part the old industrial rust belt, is now showing hopeful signs of improvement.
The IMI identifies local markets that show positive trends in housing permits, employment, and home prices over a six-month period.
Energy-related industries such as mining and oil and gas, may have contributed to the growth in more than a few metro areas on this list. Several cities – including two in Alaska and two in Texas – are located in energy rich regions, and likely reaped benefits from the rise in oil prices. Alexandria, Louisiana has experienced growth in its mining industry.
While earning a spot on the IMI is undeniably good news, it is still important to differentiate between “strength” and “improvement.” We could begin to see positive trends emerge in several markets that have reached bottom and are beginning to turn around, thereby improving, but far from strong.
The Improving Markets Index will be released on a monthly basis. The National Association of Home Builders is a professional organization comprised of over 800 state and local builders associations. Its various divisions monitor and work toward improving the housing finance system; analyze and forecast economic and consumer trends; and promote housing policy issues.